The recovery following a total knee replacement relies heavily on physical therapy (PT) to restore mobility and strength. This rehabilitation is necessary for a successful outcome with the new joint. Medicare covers these required therapy services, but the specific benefits, duration, and patient costs depend on the medical setting where rehabilitation is received. Understanding how Medicare covers each setting is important for planning the recovery journey.
Physical Therapy Coverage in Post-Acute Settings
The immediate period following surgery involves intensive rehabilitation covered under Medicare Part A benefits. This coverage applies to inpatient care received in a Skilled Nursing Facility (SNF) or a certified Inpatient Rehabilitation Facility (IRF). Admission to an SNF requires a qualifying hospital stay of at least three consecutive days.
In an SNF, Medicare covers the first 20 days of medically necessary care, including physical therapy, at 100% of the approved amount. For days 21 through 100, the patient pays a daily coinsurance. After the 100th day, Medicare coverage for the SNF stay ceases. This setting is for patients needing daily skilled care who do not require acute hospitalization.
If a patient is homebound and cannot leave without significant assistance, they may qualify for Home Health Care. Under this benefit, physical therapy can be administered in the patient’s home on a part-time or intermittent basis. Services must be medically necessary and ordered by a physician to help the patient regain function after the joint replacement.
Rules for Outpatient Physical Therapy
The longer-term phase of rehabilitation transitions to an outpatient setting, covered under Medicare Part B. This includes therapy sessions at a standalone clinic, a hospital outpatient department, or a physician’s office. Part B covers 80% of the Medicare-approved amount for medically necessary services after the annual deductible is met.
A physician or qualified provider must establish a formal plan of care for coverage to continue. The therapy must be a skilled service, meaning it requires the expertise of a physical therapist for safe and effective exercises and techniques. Routine exercises that the patient can perform safely alone are generally not covered.
Medicare no longer imposes a fixed annual limit on outpatient therapy payments. However, a financial threshold is in place for documentation requirements once a patient’s total cost reaches a specified amount ($2,410 in 2025). The provider must confirm the therapy remains medically required and uses the KX modifier on the claim to justify the services despite reaching this threshold.
Patient Financial Responsibility and Coverage Requirements
Under Original Medicare, beneficiaries have out-of-pocket costs structured differently across Part A and Part B. For Part A coverage, such as an SNF stay, the patient pays the Part A deductible for each benefit period. After the deductible is paid, Medicare covers the full cost of a qualifying SNF stay for the first 20 days.
For outpatient physical therapy covered by Part B, the patient must first satisfy the annual Part B deductible, which is $257 in 2025. Once the deductible is met, the patient is responsible for 20% of the Medicare-approved amount for each subsequent therapy session. Medicare pays the remaining 80%.
To ensure coverage, physical therapy must be ordered by a physician and documented as medically necessary to treat the post-surgical condition. This documentation must show the patient’s condition is improving, or that therapy is needed to maintain current function or slow its decline. Many beneficiaries with Original Medicare purchase a Medigap policy to help cover the Part A deductible, the Part B deductible, and the 20% Part B coinsurance.
How Medicare Advantage Plans Handle Post-Operative Therapy
Patients enrolled in a Medicare Advantage Plan (Part C) receive their Part A and Part B benefits through a private insurance company approved by Medicare. While these plans must cover the same medically necessary physical therapy as Original Medicare, the costs and rules differ significantly. Out-of-pocket costs, such as copayments or coinsurance, are determined by the specific plan and may vary from the standard 20% under Part B.
A common difference is the requirement for prior authorization before starting post-operative physical therapy. This involves the plan reviewing the physician’s order and plan of care to ensure services meet the plan’s coverage criteria. Patients must also ensure the physical therapy provider is within the plan’s network. Using out-of-network providers may result in significantly higher costs or denial of coverage.